Q & A :APPOINTMENT OF DIRECTOR
P.D.RUNGTA
QUERY:APPOINTMENT OF DIRECTOR
DEAR PROFESSIONAL COLLEAGUES,
AS WE KNOW THERE ARE THREE SECTION FOR APPOINTMENT OF DIRECTOR. SECTION 260,262 & 313.
WHERE BOARD HAS POWER TO APPOINT DIRECTORS.IN CASE OF A PRIVATE LIMITED COMPANY THERE IS PRACTICE OF FILING FORM-32 WITH THE DESIGNATION AS DIRECTOR INSTEAD OF ADDITIONAL DIRECTOR.SO APPOINTMENT OF DIRECTOR WILL BE TREATED AS APPOINTMENT BY THE SHAREHOLDERS/MEMBERS.THAN THERE MUST BE GENERAL MEETING PLEASE SUGGEST.
THANKS
RGDS
CS M.K.SHARMA
9830135760
REPLY 1
Dear Mr. Manoj Sharma,
Irrespective of whether it is a private limited company or public limited company, the Board of Directors have power (usually conferred on them by the Articles of Association of the Company) to appoint directors, pursuant to Section 260 of the Companies Act, 1956. They are only "additional directors" and are liable to hold the office up to the ensuing annual general meeting of the Company and are usually reelected at the Annual General Meeting. In the form 32 filed for such appointment, the directors' designation is to be stated as "additional directors". Even it is mentioned as "directors" in the form 32, this does not change their positions. Once these additional directors are reappointed at the general meeting, they become "directors", liable to retire by rotation. Again, there is a requirement of filing form 32 wherein their designation will have to be mentioned as "director". In otherwords, change in designation has to be clicked in the form.
In case of appointment of director by the board in the casual vacancy, pursuant to Section 262 of the Companies Act, 1956, such director will continue till the time the original director would have continued in the board and suitable mention about this is stated in the form no.32. Similarly, the directors, appointed pursuant to Section 313 of the Companies Act, 1956 are "alternate directors" appointed to take care of the absence of the original directors (usually foreign directors) and will continue till such time the original directors return.
With warm regards,
CS. K. Krishnamoorthy,
Bangalore
9980744334
REPLY 2
Even in case of a private company if a director is appointed as additional director,he holds office till the date of AGM only.his appointment has to be regularised by approval of shareholders at General meeting.Only difference is that for regularising the appointment , in case of a private company the formalities under Section 257 are not applicable.
regards
kalidas
REPLY 3
Dear Sir
For private and public limited company
Additional Director is appointed by Board and hold office up to next AGM.
Additional director is reconfirmed as director in the immediately next AGM/EGM.
Director is appointed in AGM/EGM and not in Board Meeting.
namba...@hotmail.com--
Section 260 is for the appointment of additional directors.
Section 262 refers to the fillling of casual vacancy of director
and Section 313 is related to the appointment of alternate director.
The appointment of director is better to be done in EGM as due to thisin the filling the form 32 their will be no confusion of selecting the additional or alternate director and the appointment of director will be the normal one.
CS KANIKA PHOPHALIA
>
regards
>
kalidas
As per the provision the board can appoint only additional director till to the next AGM and he regularise his appointment in the AGM, and for this form32 will be file as change of designation only after that he will be appoint as director
regards
According to my personal views:
Though CS Kanika Phophalia's suggestion is little innovative, I do not find a single provision in the Corporate Law, which can make the appointment invalid, rather is much concrete.
It cannot be rejected at all, outrightly.
Thanks and Regards,
Dilip K. Agarwal
REPLY 8
Dear All,
I am fully agreed with the view of CS Kanika. However, she could'nt elaborate it clearly. One can appoint the director in EGM also and it would be the regular director and not called as additional director. In this case, there is no need to file 2 Form No. 32 as in the case of additional director appointed in the board meeting. Please read section 255 to 257 along with section 260 of the Act.
Regards,
Sarvesh Bhardwaj, Advocate, New Delhi
(M.Com, F.C.S., PGDBM, LL.B)
Mobile: 9871146058, 9350301058
Dear all (ATTN.MR BHARDWAJ)
if two form no. 32 are to be filed one for additiinal and another for regularising the same in AGM , may the mca system will show same director in two different designation,as becasue there is no option practically in the form no 32 to replace or regularise the additional director.
CA,RKRoongta
Kolkata 09830044605
Pramod Dayal Rungta
M.Com.,LL.B.,AICWA.,DISA(ICAI).,FCA
Member EIRC ICAI (2010-12)
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